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Debt after the military: 5 things to know

If you have debt post-service, you’re not alone. In fact, service members and veterans tend to have more debt than civilians.1 Being aware of several key factors can help you manage debt successfully.


Credit score matters

Your credit score is an indication of financial wellness that lenders look at to help determine your ability to secure lower interest rates for vehicle loans, mortgages, credit cards and other types of credit.

Quick tip: If you want to know what’s going on with your credit, you can view your credit report for free at You won’t see your credit score, but you will see a breakdown of your debts and payment history. The three credit reporting agencies—Transunion®, Experian® and Equifax®—typically offer the ability to view credit scores and payment history for a small fee.


Credit card debt can pile up

Whether you knew it or not, you may have been protected from high credit card repayment rates while you served, thanks to the Servicemembers Civil Relief Act. When you leave active duty, though, standard interest rates kick in. Credit card rates are usually well into the double-digits, so interest charges can pile up quickly. Paying those bills late—or ignoring them—can damage that all-important credit score. Even carrying a large balance can start to hurt your credit. Try to stay on top of your credit card bills as much as possible and be sure to read the fine print and know when payments are due.


Payday loans are risky

You may be tempted to use nontraditional means—like a payday loan—to help you pay your bills. You wouldn’t be alone: According to a 2018 survey, 44 percent of military members use these types of services.2 But you may want to tread carefully. While you were on active duty, the Military Lending Act capped the rates many lenders were allowed to charge at 36 percent. As a veteran, that protection does not apply, and you could be charged as much as 100, or even 500, percent. Those high rates make these types of loans extremely difficult to pay back.

Quick tip: Consider all other options for dealing with difficult bill repayment—like talking to your creditors about repayment plans or extensions or meeting with a credit counselor.


The Veterans Administration may help consolidate debt

You may consider consolidation as an option for managing debt. Generally, consolidation is when you take out one big loan to cover all of your existing debt, leaving you with one loan to repay, usually with a lower rate. The Veterans Administration does not specifically offer a debt consolidation loan, but it does offer a type of home refinancing that is often referred to as one. If you own a home, this could be an option for you. It may be a long process, since the VA will appraise your house to make sure that including additional debt in a refinancing won’t cause your loan to exceed the value of your home. As with any major financial decision, it’s a good idea to discuss options with a financial advisor or your lender.


Find free financial counseling

If you have Veterans Group Life Insurance, you may be eligible for free financial counseling. The National Foundation for Credit Counseling can also point you to certified credit counselors. You can report any problems you might encounter to the Consumer Financial Protection Bureau, which has a division specifically tasked with helping service members and veterans.

You can schedule an appointment online or just walk in to any Bank of America financial center to meet with a Bank of America associate.

1 National Foundation for Credit Counseling; Financial Industry Regulatory Authority

2 Payday Loan Advice

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The material provided on this website is for informational use only and is not intended for financial or investment advice. Bank of America Corporation and/or its affiliates assume no liability for any loss or damage resulting from one’s reliance on the material provided. Please also note that such material is not updated regularly and that some of the information may not therefore be current. Consult with your own financial professional when making decisions regarding your financial or investment management. ©2023 Bank of America Corporation.

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